Pinterest is profiting off your ‘pinspired’ purchases without a disclosure

Pinterest has become entirely unavoidable. In its mere 23-month existence, the site has managed to create (or rather, curate) a cult-like following of devoted, pinning-obsessed users. It was recently reported that Pinterest drove more referral traffic last month than Google+, Reddit, YouTube, LinkedIn, and MySpace combined.

While there are plenty of users ready to worship at the Pinterest alter, skepticism remains. Isn’t the site, at its core, just a series of advertisements and marketing materials consumers are helping to circulate and promote? Doesn’t anyone feel like this culture of visual stimulation and social discovery is just even a little shallow? Isn’t anyone’s inner critic screaming that we’re making ourselves increasingly ripe for predictive advertising?

Well, turns out there might be something to your inner cynic. Yesterday it was reported that Pinterest is already making money – and if you know anything about social startups, you know this isn’t normal–Twitter is still trying to find an effective road to revenue. It’s a struggle to turn a free, Web-based application into a money-making scheme, so the fact that Pinterest is insanely popular shouldn’t be enough to line its pockets already.

Social media commentary site LLSocial did a little digging into how Pinterest could be profiting, and surprise, surprise, it’s all woven into the tangled web e-commerce weaves. “If you post a pin to Pinterest, and it links to an e-commerce site that happens to have an affiliate program, Pinterest modifies the link to add their own affiliate tracking code,” writes Josh David. “If someone clicks through the picture from Pinterest and makes a purchase, Pinterest gets paid.”

A lot of websites do this – this website does that. It isn’t uncommon. But we don’t brand ourselves as a social networking community. People use Pinterest, thinking they are creating this visual, social collection that describes them and organizes their Web interests visually. In reality, they are clicking ads upon ads upon ads and eventually, when someone purchases something, Pinterest profits.

And really, this would be fine if Pinterest were disclosing that information. “They don’t have any discloser of this link modification on their site,” Davis explains. “Pinterest has taken this action in a quiet, non-disclosing way.” Web publishers know that we’re required to acknowledge affiliate linking – you simply owe it to users and readers to explain that their participation is being weighed and that there is a connection between the product being advertised and the platform displaying it.

Of course if Pinterest were to up front explain that this was how its site operated, it would create a very different dynamic. Every time you pinned something, it would sort of be like adding items to your Amazon shopping cart, albeit it in a more intuitive, visual way. But people don’t use Pinterest to shop online. They use it as an inspiration board, a source for décor ideas, an eye-pleasing time killer. Attaching e-commerce to its description kills some of the whimsical, creative aura it’s cultivated.

It’s likely that only a minority of users will be outraged by this revelation (disclaimer: this user deleted her barely used account immediately). Most will probably be a little disappointed in the scheme but continue using the site as per usual, and many won’t care at all. And in Pinterest’s defense, its only fault is failing to own up to installing SkimLinks and therefore look like it was duping users (whether or not that was the intent). The most cynical of us (points at self) imagines the creators sitting around a big table, plotting a site that tricks Tumblr-types into e-shopping without knowing it.

But back to “in Pinterest’s defense”: companies have to make money, and Pinterest’s model is rather covert and doesn’t interrupt the site’s flow, which is good. Going this route this soon (aside to the underhandedness of it all) is really uncommon in this market, but that doesn’t mean it can’t be done. If this is Pinterest’s path to profitability, then so be it.

In a lot of ways it’s better than the alternative: page-crowding sidebar ads, pop-ups, or sponsored products spanning pinboards would seriously detract from the site. But it would have likely been wiser to establish its status quo and reel in users and then introduce an affiliate linking program after everyone proved to be addicted to the platform. We’re likely going to see this disclosure shortly, as Pinterest is bound to respond. We contacted the Pinterest team but haven’t heard back yet.

And just to rub a little salt in the wound, Pinterest wasn’t actually the site that reached 10 million monthly unique users faster than any before it. That honor actually belongs to Formspring. Formspring reached that mark within two months of its launch. Of course it has since lost that momentum, but today is the day for putting Pinterest in its place a little.